Ontario Plan: Making auto insurance cheaper

For years, the government of Ontario has promised to make auto insurance cheaper for drivers. Now it has a new plan for how it’s going to do it.

The Fair Auto Insurance Plan is set to help fix what many Ontario drivers believe is an untrustworthy and broken system by reducing fraud, improving access to care for victims of collision, and protecting consumers by better regulating how insurance companies calculate premiums.

Charles Sousa, Minister of Finance announced the plan on Tuesday, saying that while the government has been working on lowering auto insurance costs for years, previous efforts haven’t gone far enough. The new plan is based on recommendations made in an April 2017 report by David Marshall, Ontario’s advisor on auto insurance.

With the study as a guide, the new regulations could mean auto insurance is not only going to get cheaper, but it will also be a better financial product. Here are the key highlights of the new plan:

Reviewing the risk factors used by insurers to calculate premiums and ensure that certain drivers are not paying unfairly high premiums

Ensuring that lawyers’ contingency fees are more transparent and fair by introducing a mandatory standard fee agreement

Marshall’s original report highlighted key issues in the Ontario auto insurance system, such as the disconnect between the province’s lower than average road injury and fatality rate and its higher than average cost of claims. It also identified that the majority of insurance payouts haven’t been going to the victims of collisions, but instead mostly being used to cover legal and medical costs.

Fraud is also believed to be a major factor behind high insurance rates in the province, especially in and around Brampton. The new rules will begin to address many of these issues starting spring 2018, according to the government’s release.

The Fair Auto Insurance Plan is just the latest step in an overall plan “to create fairness and opportunity during this period of rapid economic change.” Other efforts include new housing rules, higher minimum wages, and employment reform to free post-secondary education for low-income students and prescription drugs for young people.

The changes are clearly aimed at making it more affordable for everyday people to live in Ontario during a time when it has become more expensive than ever to live in the province.